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The Case For A Rapid Economic Rebound In 2021

Louis Navellier profile picture
Louis Navellier


  • Major stock indexes have set 32 record highs in 2021 so far. The market often looks six months ahead, so it sees a robust first half.
  • Retail sales were up 5.3% MoM in January, after economists expected only 1.2% growth. Consumers are flush with cash, ready to spend when the coast is clear. The personal savings rate was 13.7% in December, almost double the 7.6% rate a year ago.
  • Q4 2020 GDP was just upgraded to +4.1% (annualized and after inflation), and the Atlanta Fed's GDPNow real-time model sees +9.6% growth for Q1 2021, more than double its forecast of 4.5% on February 10.

By Gary Alexander

Until last Thursday, the stock market was practically shouting in our doubting ears: "There's a big recovery coming!" But we haven't believed it. We have doubted the market's rapid rise, saying it is "overbought" and clearly in a manic state, ripe for a correction. But maybe the market is right.

Major stock indexes have set 32 record highs in 2021 so far, including last Wednesday's 424-point surge in the Dow, breaching 32,000 at 1:45 pm before falling 1000 points Thursday and Friday. Even if that is the start of a much-needed breather, the market often looks six months ahead, so it sees a robust first half.

One analyst making such a case is Ethan Harris, an economist at Bank of America Global Research. In "Fasten your seatbelts - The case for a roaring economic recovery," Harris lists four ways in which this recovery should be faster than 2009, according to a summary by Yahoo Finance reporter Myles Udland:

  1. The stimulus in 2009 was late, small and faded too fast. Today's stimulus has been timely, huge and very persistent.
  2. In a COVID-19 world, much of the stimulus effect has been deferred until the economy reopens.
  3. The COVID-19 crisis should leave much smaller economic scars than the biggest banking and real estate crisis in modern history (in 2008).
  4. Household balance sheets were deeply damaged in the last cycle; they are in great shape today.

In addition, according to the Congressional Budget Office (CBO), the economy did not reach full employment after the 2008-09 recession until 2017 - almost eight years later, but Harris says, "This time we expect full employment by 3Q 2022, or nine quarters into the recovery. Fasten your seatbelts."

The year is already off to a torrid start. Retail sales were up 5.3% in January, month over month, after

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Louis Navellier profile picture
Navellier & Associates was founded by Louis Navellier in 1987 and since then has guided thousands of investors by applying our disciplined, quantitative investment process to a broad range of equity products. Every day, investors hire Navellier to manage their assets in a private account, mutual fund, or defensive portfolio. For over 25 years, we’ve been zeroing in on opportunities for long-term growth. We employ a veteran team of investment and client service professionals who deliver exceptional, personal service and industry-leading information to our clients. _________________________________ Important Disclosures that Accompany Navellier & Associates Articles: *Navellier may hold this security in one or more investment strategies offered to its clients. None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings. Graphs are for illustrative and discussion purposes only. Although information has been obtained from and is based upon sources Navellier believes to be reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. All opinions and estimates constitute Navellier's judgment as of the date of the report and are subject to change without notice. This report is for informational purposes and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. Any decision to purchase securities mentioned in this research must take into account existing public information on such security or any registered prospectus. Past performance is no indication of future results. FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

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